Zen Loses It's Zen...80% of Sales Not Sold by Licensed Agents

Feb 9, 2016

  1. Duaine
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    Duaine Guru

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    80% Of Zenefits Deals In Washington State Done By Unlicensed Brokers
    Data obtained by BuzzFeed News shows the extent to which the company apparently flouted the state’s insurance law. Zenefits says it is doing a “comprehensive review” of its licensing systems.


    In Washington state, where Zenefits is currently under regulatory scrutiny, 83% of the insurance policies sold or serviced by the company through August 2015 were peddled by employees without necessary state licenses, according to data obtained through a public records request. The apparent pattern of unlicensed insurance sales could strain Zenefits’ relationships with major insurance carriers, which demand that only properly licensed brokers sell their policies.

    If this sounds familiar, it’s because BuzzFeed News broke the news last fall that the San Francisco-based Zenefits had apparently flouted many state’s insurance laws by allowing unlicensed employees to sell health insurance. There is evidence of this behavior in at least seven states, dating back as far as the summer of 2014 and continuing through summer 2015. We reported at the time that the insurance commissioner in Washington state was examining whether Zenefits operated there without licenses.

    http://www.buzzfeed.com/williamalde...ashington-state-done-by-unlicensed#.rrlvxGVYo
     
    Duaine, Feb 9, 2016
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  2. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Its easy to make a lot of money when you dont use agents and the house keeps 100% of the comp plus overrides!

    Imagine what will happen to their stock when they start using actual agents and suddenly have a 70% drop in profits...
     
  3. RayNY
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    Guys, I think we're doing something wrong.

    "Zenefits... was valued at $4.5 billion in a funding round last year."

    They wrote 132 policies total in WA, in 2 years, with 56 employees. 110 are being disputed as handled by someone unlicensed.

    I know a few people who write more than that by themselves and aren't worth anywhere near $4.5B.
     
    RayNY, Feb 9, 2016
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  4. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Yeah but some of those policies were freaking huge premiums. In 2014 they reported revenues of $20mm. I dont know very many agents pulling in $20mm per year off of less than 200 policies.

    But I get what your saying. Even at a multiple of 40x earnings (which is outrageous), $20mm does not get you to a value of $4.5b.

    A lot of that value is probably based on the HR software that they currently do not charge for. The software could be monitized very easily and probably double or triple the revenue in a single year. But even with that, $4.5b would still be way overvalued. That just shows you how stupid venture capital money has become in the tech world. But nah.... no tech bubble right now at all... :skeptical:

    I started moving my equity holdings to cash last May. By Sept I was 90% cash. Now ive taken 20% and put it in AAAs and High Yields. But Im still 80% in cash... and its looking like this Fall or Winter will be a great time to buy in. My income will take a hit when the tech bubble busts... but my personal holdings will do very well :twitchy:
     
  5. Josh
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    Josh Retired Agent, Current List Broker

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    They're nationwide and do a LOT more than just sell insurance.
     
    Josh, Feb 9, 2016
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  6. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Yes they do... but the main thing they make money from is selling insurance. A lot of their other services are free.
     
  7. Josh
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    Josh Retired Agent, Current List Broker

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    Right, but they're not doing it exclusively in Washington.
     
    Josh, Feb 9, 2016
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  8. Brian Anderson
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    Brian Anderson Executive Editor

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    From Forbes:

    On Monday, Zenefits cofounder Parker Conrad resigned as CEO and as a director of the company. The move comes as further questions are being raised about the steps Conrad took to put Zenefits into hypergrowth–including flouting laws about who is allowed to sell insurance.

    COO David Sacks, formerly of PayPal, now steps into the CEO job at Zenefits. In an email sent to employees, he admitted the company has taken too many wrong steps. “We sell insurance in a highly regulated industry. In order to do that, we must be properly licensed. For us, compliance is like oxygen. Without it, we die,” he wrote. “The fact is that many of our internal processes, controls, and actions around compliance have been inadequate, and some decisions have just been plain wrong. As a result, Parker has resigned.”

    Forbes Welcome
     
  9. russelltw
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    russelltw Guru

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    Sure nothing will happen to this guy...If it were common joes like us...DOI would crush us.
     
  10. Yagents
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    Yagents Guru

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    Just give them a navigator title and avoid compliance requirements.

    What's the difference?
     
    Yagents, Feb 9, 2016
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